Use the Table Below to Answer the Following Question(s) Use a Linear Optimization Model Based on the Data to Hides

question 44

Multiple Choice

Use the table below to answer the following question(s) .
Letherin Hides is a company that makes boots specifically targeting college students. Forecasts of sales for the next year are 200 in the summer, 450 in the autumn, and 500 in the winter.
Accessories that are used on the boots are purchased from a supplier for $31.66. The cost of capital is estimated to be 24% per year (or 6% per quarter) ; thus, the holding cost per item is 0.06($31.66) = $1.9 per quarter (rounded figure) . Letherin Hides hires freelance art designers at part-time to craft designs during the summer, and they earn $6 per hour. In the autumn, labor is more difficult to keep, and the owner must pay $6.5 per hour to retain qualified help. Because of the high demand for part-time help during the winter holiday season, labor rates are higher in the winter, and workers earn $7.75 per hour. Each boot design takes 2 hours to complete. How should production be planned over the three quarters to minimize the combined production and inventory holding costs?
The table below provides information on Letherin Hides boot design cost and production. $\begin{array}{|l|l|l|l|}\hline \text { Letherin Hides } & & & \\\hline & & & \\\hline \text { Data } & & & \\\hline & & & \\\hline & \text { Summer } & \text { Autumn } & \text { Winter } \\\hline \begin{array}{l}\text { Unit Production } \\\text { Cost }\end{array} & 12 & 13 & 15.5 \\\hline \text { Unit Inventory } & & & \\\text { Holding Cost } & 1.9 & 1.9 & 1.9 \\\hline \text { Demand } & 200 & 450 & 500 \\\hline\end{array}$ Use a linear optimization model based on the data to answer the following questions.
-According to the linear optimization model, what is the net production for autumn?

• A) 200
• B) 500
• C) 450
• D) 50

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Definitions:

Public Good

A product or service offered for free to all society members, by either the government or a private entity, without the intent of making a profit.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available for everyone to use and one person's use does not reduce availability to others.

Private Goods

Goods that are both rivalrous and excludable, meaning consumption by one person reduces availability for others and access can be restricted.

Tragedy of the Commons

A situation in which individual users, acting independently according to their own self-interest, deplete or spoil shared resources, even though it is contrary to the group's long-term interests.